Does the Profitability of an Outpatient Surgery Influence where it is Performed? A Look at Ambulatory Surgery Centers and Hospitals

Ambulatory Surgery Centers (ASCs) are small (typically physician owned) healthcare facilities that specialize in performing outpatient surgeries and therefore compete against hospitals for patients. Physicians who own ASCs could potentially treat their most profitable patients at their ASCs and less profitable patients at hospitals, reducing hospitals' profit. This paper asks if the profitability of an outpatient surgery impacts where a physician performs the surgery. Using data from the National Survey of Ambulatory Surgery, we find that higher profit surgeries do have a higher probability of receiving treatment at an ASC compared to a hospital. After controlling for the type of surgery performed, we find that a 10% increase in a surgery's profitability is associated with a 1 to 2 percentage point increase in the probability the surgery is performed at an ASC.